Why Are Pending Sales Falling Through in Southern California? Here’s What You Need to Know

In an increasingly uncertain market, Southern California is seeing a noticeable spike in canceled pending home sales—and it's sending a signal to both buyers and sellers.

According to Yahoo Finance, nearly 14% of pending transactions in San Diego County were canceled in January 2025. Across Southern California, similar patterns are emerging in Los Angeles, Riverside, and Orange Counties, echoing a larger national trend that hit a 14.6% cancellation rate in March—the highest for that time of year since 2017.

So, what’s driving these canceled deals, and what does it mean for you as a buyer, seller, or investor in SoCal?

🔍 Key Reasons Buyers Are Backing Out

1. High Mortgage Rates Are Straining Budgets

Many buyers pre-approved months ago are finding that their purchasing power has dropped significantly. With rates hovering around 6.6%, monthly payments are pushing some out of their comfort zones.

2. Economic Uncertainty

Concerns over inflation, stock market volatility, and whispers of a recession are causing buyers to pause and re-evaluate. Many are unwilling to move forward unless they feel absolutely secure in their financial outlook.

3. More Choices = More Second Thoughts

With inventory up over 30% year-over-year in some SoCal markets, buyers are seeing more listings hit the market. This leads to a rise in "buyer’s remorse"—especially if something better (or cheaper) comes along before escrow closes.

📉 What This Means for Sellers

If you're planning to sell in Riverside, Orange County, or anywhere in Southern California, be prepared for more caution and less urgency from buyers. Some tips:

• Price realistically based on recent comps

• Be flexible with terms or credits, especially after inspections

• Have a backup plan if your initial buyer backs out

🔁 For Buyers: Opportunity Knocks

Yes, cancellations are frustrating—but they also present opportunity. Homes falling out of escrow often come back motivated. If you're a prepared buyer, you might score favorable terms on a home that's re-listed.

🌟 Final Thoughts

Southern California's real estate market isn’t crashing—it’s correcting. These rising cancellation rates reflect changing buyer psychology more than weakening fundamentals.

As always, staying informed and working with a knowledgeable real estate advisor can help you navigate these shifts strategically—whether you’re buying, selling, or investing.

Want to know what this means for your local market?

📲 Contact me and I’ll break down current data for your specific city or zip code.